As China takes centre stage, bit players must wait

Page Tools

China's emerging role as the economic leader of East
Asia is forging new alliances, and reopening some old wounds,
writes Jennifer Conley.

With new-found confidence on the international stage, China is
engaging with its neighbours. It is building partnerships with the
nations of Asia, including Australia, in an effort to demonstrate
its centrality to the future development, stability and prosperity
of the region.

This sense of regional purpose is new. Until the Asian financial
crisis less than 10 years ago, China looked inward to its newly
burgeoning economy. Then, at the height of the crisis, the Chinese
Government signalled its intention to play a more active role in
the region with a series of bold policies aimed at stemming the
crisis.

China contributed more than $US4 billion in aid to affected
countries. Its decision not to devalue the yuan elicited praise
from regional governments. China now plays a leadership role in
regional groupings such as ASEAN Plus Three and APEC, and has led
the way in creating the East Asian Summit. It is pursuing bilateral
and regional free trade agreements and has increased its profile
and demands on less developed neighbours. In short, China has
accumulated a broad set of new influences across the Asian
region.

The rise of China has generated excitement and trepidation. US
Deputy Secretary of State Robert Zoellick recently said there was a
"cauldron of anxiety about China" in the United States - as there
were increasing signs of policies that sought to direct markets,
rather than open them.

At the recent Asialink conversations - a gathering of opinion
leaders from South-East Asia and Australia - similar concerns were
expressed. One participant observed that many in Indonesia feared
China as a larger northern neighbour. China as regional superpower
is a phenomenon that is viewed with suspicion.

A challenge for countries of the region, another delegate noted,
is avoiding over-dependence on China in trade. A hard landing in
China would have adverse effects around Asia. The fears are of an
economically faltering China as well as a prospering one.

China's economic awakening has been a positive shock. Bilateral
trade between China and the 10-nation ASEAN block soared by 25 per
cent to $US59.76 billion ($A80 billion) in the first half of 2005.
Rising per capita income in China is creating demand for Asian
consumer goods and services. For ASEAN, this has meant a six-fold
increase in trade with China over the last decade.

A report by economists Heather Smith, Garth Day, Brian Thomas
and Luke Yeaman shows that before the Asian crisis of 1997 East
Asia's trade was dominated by demand from outside the region,
particularly from the US. Since then, the US has given way to the
European Union as the region's largest export market and, in 2003,
China overtook Japan as East Asia's main regional export partner.
China will overtake the EU to become the region's main export
market within the next few years.

China has wasted no time in leveraging its new position, and
little wonder. The People's Republic borders 14 countries.

China also has an interest in replacing the US as the chief
influence in East Asia. Few international relationships have
changed as much or as quickly as the relationship between the 10
countries of ASEAN and China, with increasing co-operation.

Indonesia, once suspicious of China's ruling Communist Party,
this year signed an agreement with China for the transfer of
missile and rocket technology. The Philippines described the visit
to Manila in April by China's President Hu Jintao as "a golden
moment" in the relationship, despite contested boundaries in the
South China Sea.

The Chinese Government says its path to modernisation is "the
development path to a peaceful rise". But Beijing's desire to
regain territories it feels rightfully belong to the PRC has given
rise to tensions.

The mood in Japan towards China has grown icy of late. Earlier
this month, Japan's Trade Minister, Shoichi Nakagawa, expressed
concerns about China shipping pipes to disputed oil and gas fields
in the East China Sea. Japan wants China to cease production, which
it says will siphon gas from Japanese territory. China and Taiwan
have become more vocal in rejecting Japan's claims to exclusive
rights in the zone.

Japan's economy is three times larger than China's, but China is
growing at 8-9 per cent a year. There are historical and cultural
tensions between the nations, but the two have worked together
successfully on several issues. The East Asian Summit was initiated
in part by the Chinese to provide a stabilising influence.

The most strained relations in the region have developed over
China's sovereignty claim to Taiwan. In a University of Melbourne
Asia Policy Paper, Professor Hugh White argues that the risk of a
US-China war over Taiwan arises "because the issue has become the
proxy for US-China strategic competition in East Asia".

It is unclear whether the rest of Asia believes Beijing's claim
for a "peaceful rise", but one thing is clear - Asia is on the
move, fuelled by the momentum of a rising China and an emerging
India.

As former prime minister of Singapore, Goh Chok Tong told the
University of NSW in September that never before have we seen the
simultaneous rise of two huge powers, whose combined population
makes up more than one-third of humanity.

"Japan will continue to be a major player. The relationship
between Beijing, New Delhi and Tokyo will profoundly affect the
regional environment," he said. "Some jostling is inevitable, and
periodic tensions can be expected."

Asia and Australia will benefit from growth in the region if we
look beyond history, geography and ethnicity and focus on our
complementary interests.

Jennifer Conley is a director with Asialink, an initiative of
the Myer Foundation at the University of Melbourne